Tata Steel has posted a surprising net loss of Rs 6,196 crore on a consolidated basis for the quarter ended September, also missing street estimates, impacted by weak performance of its European operations.
In comparison, the steel major had posted a net profit of Rs 1,514.42 crore in the comparable year-ago period. During the quarter review, the Tata Group firm’s consolidated revenue fell 7% to Rs 55,682 crore from Rs 59,878 crore recorded in the year-ago quarter. Its Ebitda fell 29.6% to ?4,268 crore from Rs 6,060 crore, Tata Steel said in a statement.
A consensus estimate of Bloomberg analysts was expecting the firm to post a consolidated net profit of Rs 441 crore on revenues of Rs 55,982 crore and Ebitda of Rs 4,957 crore.
“India business generated a higher margin of around 20% and Ebitda stood at Rs 6,841 crore. In Europe, margins moderated especially in the UK business, while the Netherlands business was broadly stable on a QoQ basis. Revenue per tonne was lower in both geographies. However, improved costs in the Netherlands led to broadly similar margins,” Tata Steel executive director and chief financial officer Koushik Chatterjee said.
Tata Steel’s Europe revenues were at £1,812 million, while it posted an Ebitda loss of £242 million. Deliveries were marginally lower at 1.81 million tonne due to subdued demand and ongoing relining of one of the blast furnaces at Ijmuiden, which will be completed in the third quarter of this fiscal, it said.
Liquid steel production in Europe improved to 1.95 million tonne on a QoQ basis, primarily driven by better operating efficiency in the Netherlands.
The company’s India revenues were at Rs 33,922 crore and Ebitda at Rs 6,841 crore.
Tata Steel CEO & MD TV Narendran said: “Tata Steel India delivered steady performance, with crude steel production of around 5 million tonne. Domestic deliveries were up 6% YoY, despite renewed volatility and seasonal factors during the quarter. Among the key segments, auto and branded products & retail had best ever 2Q sales”.
“In the Netherlands, we will shortly be submitting the detailed decarbonisation proposal to the Dutch government seeking regulatory and financial support. In India, we are committed to responsible growth and are undertaking multiple initiatives ranging from scrap charging in blast furnace to greening the power mix,” he said, adding, the company is entering into an agreement to secure 379 MW renewable power for India operations.
The company’s capex spent was Rs 4,553 crore for the quarter and Rs 8,642 crore for half year. This was broadly in line with the guidance of Rs 16,000 crore for FY24. Tata Steel’s net debt stood at Rs 77,032 crore and the group had a liquidity of Rs 27,637 crore.
Earlier in September, Tata Steel had announced plans to invest in a scrap-based electric arc furnace at Port Talbot, UK, at a cost of £1.25 billion with a government grant of £500 million.
Following the plans to change the processed route for steelmaking, the existing heavy-end assets at Tata Steel UK will only be used for a defined period.
“Accordingly, we have taken an impairment charge of Rs 12,560 crore in the standalone financial statements. We have also taken a charge of Rs 6,358 crores in consolidated financial statements about the UK business,” Chatterjee added.
According to a Bloomberg report, Tata Steel will reveal a final decision on the Port Talbot site in Wales on Wednesday, it reported quoting people familiar with the matter, adding this would involve closing the blast furnaces at the site, resulting in 3,000 job cuts across Tata’s operations in south Wales.
